Allure of Excessive Return Does Not Have to Mean You Lose 100% of Your Investment

The exponential growth in crypto markets, especially over the course of 2017, means that even the mainstream media is now covering various events and biggest market announcements. Some of the highlights include the crackdown of crypto trading by various governments, widespread criticism of Bitcoin by financial community (although that has since changed somewhat), the introduction of Bitcoin futures market and the volatility of returns of Bitcoin and other products. The price swings are not for the fainthearted and while the allure of excessive returns drive more and more people to the market, this volatility is becoming hard to rein in, especially as the ICO market matures.

Even though choosing a crypto asset to invest in is not difficult enough, investing in a currency is made more complex by numerous warnings by pundits that a lot of cryptocurrencies are either fraudulent or do not deliver any value to people buying tokens. Late last year, Joseph Lubin, co-founder of Ethereum, said that many of the sales are used to back high-quality projects, but there have been a lot of copycat projects where people copy all the same materials (and) don’t intend to deliver any value to the people buying the tokens. While another prolific name in crypto space, Brad Garlinghouse, CEO of Ripple, pointed out that “…a lot of what’s happening in the ICO market is actually fraud, and I think that will (eventually) stop”, while also adding that many investors are now suing token issuers.

But it is not just fraud that crypto investors are afraid of – given the digital nature of the asset class, hacking is also considered to be one of the biggest threats. Most recently, a Japanese exchange has lost $530 million in cryptocurrency because of hacking. In this case, the worst outcome has been averted by the exchange which said it would return about 46.3 billion yen or $425 million of the virtual money it lost to hackers. However, other cases did not end so well.